BanKo, the microfinance subsidiary of Ayala-led Bank of the Philippine Islands (BPI) has partnered with the country’s biggest fastfood chain Jollibee Group to provide low-interest loans to a financing program launched by Jollibee Group Foundation (JGF) recently.
In a statement on Sept. 29, BPI said the JGF financing program will assist smallholder farmers under its Farmer Entrepreneurship Program (FEP).
FEP is a comprehensive agro-entrepreneurship that will help sharpen the technical skills and business acumen of farmers through training, mentorships, and technical and financial aids, said BPI. FEP also links farmers to institutional markets, such as Jollibee, Greenwich, Chowking, and Mang Inasal, for increased and steady income.
“Our partnership with BanKo addresses the crucial need of our farmers to have access to loan products that will enable them to sustain and grow further their farming businesses,” said Gisela Tiongson, JGF President.
BanKo is not JGF’s first microfinance partner, however the deal with the BPI unit “further increases FEP farmers’ financial and investment choices so they can access other inputs they need to further increase crop yields and income.”
Tiongson said access to financing remains one of the main challenge for farmers despite having a stable buyer and partners.
“In the mid- to long-term, this challenge could constrain the ability of farmer groups to expand and sustain their enterprises. Without access to formal financing institutions, they often resort to borrowing from informal financial providers who require higher interest rates,” she said.
Meanwhile, BanKo Business Head of Financial Inclusion and Microfinance Solutions Rod Mabiasen said banks and other lending firms often consider agriculture ventures as “high-risk investments” because of their vulnerability to natural calamities.
But BanKo, he said, has been providing accessible and affordable banking to the agri-business side despite this risk. “We recognize that farmers play a very crucial role in growing our economy and promoting food security. This partnership with JGF enables us to help overcome the barriers to agricultural financing,” he added.
JGF’s partnership with BanKo is the first program specifically designed to provide low-interest loan financing options to FEP partners to help them meet their working capital needs for various business expenses such as paying farm labor, renting agricultural equipment, transporting goods to the market, purchasing farm input, and making ends meet during low seasons, thereby improving their agricultural production.
Tiongson said the interest rates offered to FEP farmers are lower than the market rate.
The FEP pilot phase covers beneficiaries from onion farmer cooperatives of the Kalasag Multipurpose Cooperative and Onion and Vegetable Producers Cooperative (both from San Jose City, Nueva Ecija), and Alcala Onion Rice Corn Growers Multi-Purpose Cooperative (Alcala, Pangasinan).
Upon completion of the pilot phase, both BanKo and JGF said 100 percent of the farmer participants were able to repay their loans in full through their profits from this past onion season.